Budget 2012 - Summary Of Changes Affecting The Property Market

Author:Mr Paul Eustace and Linda Lynch
Profession:Dillon Eustace


The changes introduced by the recent budget should have a positive impact on the property market in Ireland. These changes are summarised as follows:-

Stamp Duty

The stamp duty rate for commercial properties has been reduced from 6% to 2%, irrespective of the acquisition cost of the property. This new rate applies to instruments executed on or after 7 December, 2011.

There was no change in the rate of stamp duty payable in respect of residential properties which remains at 1% for properties up to a value of 1 million euro and 2% for properties with a value of in excess of 1 million euro.

Consanguinity relief, which reduces the stamp duty liability by 50% (if certain criteria are met), will cease to apply to non-residential property for instruments executed after 31 December 2014.

Capital Gains Tax

The rate of capital gains tax has been increased from 25% to 30% in respect of disposals made after 6th December, 2011.

A new incentive relief from CGT is being introduced for the first seven years of ownership for properties bought between 7 December 2011 and 31 December 2013, where the property is held for more than seven years. Where such property is held for more than seven years the gains accrued in that period will not attract CGT. This measure comes into effect after 6 December 2011.

Upward Only Rent Reviews

The uncertainty in relation to upward only rent reviews has now ended. Upward only rent reviews are prohibited in leases created after February, 2010. The government proposal would have retrospectively affected a landlord's contractual right to an upwards only rent based on the provisions of an existing lease and interfered with the existing agreement between a landlord and a tenant.

Mortgage Interest Relief

The rate of mortgage interest relief has been increased to 30% for first time buyers who took out their first mortgage between 2004 and 2008. The mortgage interest relief available to those who purchase properties in 2012 has been increased to 25% for first time buyers and 15% for non first time buyers. Previously, the rates of relief were 15% and 10% respectively.

Mortgage interest relief will no longer be available to house purchasers who purchase houses after 31st December 2012 and will be fully abolished from 2018.

Household Charge

A €100 charge is intended to apply to all properties owned by residential investors from the 1st of January, 2012, in addition to their principle private residences. This charge is in...

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